Financial sustainability of universities and colleges

Students make a considerable financial and time investment in their studies and our regulation is designed to protect their interests. They need to be confident that they can choose a high quality course from a university or college that is financially sustainable and able to deliver the course as advertised.  

Why we regulate financial sustainability

We monitor the financial sustainability of universities and colleges on an ongoing basis to identify those that may be exposed to significant financial risks, which may impact their ability to continue offering a course or operating as a higher education provider.  

There are various factors that could affect a higher education provider’s financial performance, including: 

  • changes in income, including tuition fees, education contracts and investment 
  • changes in student recruitment, which may impact tuition fee income 
  • impact of inflation on borrowing, investment and other costs 
  • the ability of planning and governance teams and processes to effectively plan and mitigate against financial risks that emerge. 

Where we identify that a university or college is experiencing financial difficulties, we work with that institution to understand and assess the extent of the issues, and to understand what intervention may be necessary to ensure students are able to continue and complete their studies. 

How we regulate financial sustainability

The OfS has a range of measures in place to monitor and regulate the higher education sector’s financial sustainability. We collect data and other information annually on the finances of universities and colleges to assess their current financial performance and their forecast for the subsequent years. 

Each year we publish a report that analyses the overall financial performance of the sector, as well as the financial outlook by different types of higher education provider. Within this report, we explore the financial performance of the sector, the key risks and challenges that could affect the sector’s finances and modelling that predicts the impact of different scenarios on higher education providers’ financial sustainability and viability. 

Universities and colleges are also required to contact us if their financial situation deteriorates to a point where they have 30 days or less of cashflow available. We will then work closely with the affected university or college to identify and address any issues, which may involve meeting with other stakeholders including banks and lenders to provide advice and support. 

We recognise that actions higher education providers could take to maintain their financial sustainability could have a significant impact on students, such as changes to the delivery of a course or closure of facilities. We expect higher education providers to minimise any disruption to a student’s educational experience when considering actions to safeguard their financial sustainability, and to clearly communicate any changes to affected students. 

We may also get involved where changes higher education providers make to restore their financial health impact the quality of a course, including the quality of teaching, educational resources and assessment. Where our monitoring identifies potential quality concerns of a course or students’ outcomes from the course, we may assess the higher education provider to determine if the course quality is below our regulatory expectations and take regulatory action, if required. 

What happens if a course, campus or provider closes

In the event that a course, campus or higher education provider as a whole closes, a university or college needs to have a plan in place to protect students to continue and complete their studies.  

Published 16 May 2024

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